Earnings reports

Hong Kong company reporting season

Minsheng Bank’s interim net profit rises 1.7 per cent, helped by fees and commissions

Net profit rises to 27.2 billion yuan, as income from fees, commissions jumped 11.6 per cent

PUBLISHED : Tuesday, 30 August, 2016, 11:52am
UPDATED : Tuesday, 30 August, 2016, 11:52am

China Minsheng Banking Corp., the country’s biggest non-state lender, reported a 1.7 per cent increase in first-half net profit, helped by higher income from fees and commissions.

Net profit rose to 27.2 billion yuan, or 0.75 yuan per share for the first six months of the year, the bank said in a statement to the Hong Kong Stock Exchange.

Income from fees and commissions jumped 11.6 per cent to 28.1 billion yuan, while net interest income rose 0.9 per cent to 47.4 billion yuan, Minsheng said.

Minsheng’s earnings growth lagged its larger state-owned competitors, while the quality of its assets were “deeply uncertain” because of its loans to high-risk borrowers, said DBS’ research director Shujin Chen.

“Second-quarter net profit growth was a modest 0.9 per cent year on year, slightly below our forecast and lower than China Merchants Bank and CITIC Bank’s more than 6 per cent rise,” Chen said.

Non-performing loans were 1.7 per cent of its total lending, the bank said. The bank’s provision coverage ratio was 152.6 per cent, 1.08 percentage point lower than previously, Minsheng said.

There are signs that Minsheng’s non-performing loans are improving and turning around, said China Merchants Securities’ head of financial research Ma Kunpeng.

“The signs that it is improving are there,” he said. “The margins for further deterioration could be limited at this stage.”

The Beijing-based bank, founded in 1996 by a guild of China’s private entrepreneurs, is the sole publicly traded lender in the country that isn’t controlled by any large significant shareholder.

“It is the most ideal target asset for industrial or insurance capital looking to establish a foothold,” said China Merchants’ Ma.

Anbang Insurance Group now controls 20.7 per cent of Minsheng’s Shanghai-traded A shares. Among other shareholders vying to own the bank, Huaxia Life Insurance Co. and China Oriental Group Co. each owns 7.1 per cent, while investment conglomerate Fosun Group’s chairman Guo Guangchang owns 11.7 per cent of the bank’s Hong Kong-traded shares.

These shareholders are under no pressure to sell down their stakes in Minsheng, Ma said.

Minsheng’s shares have risen 14.8 per cent in the past 12 months in Hong Kong, advancing 1.2 per cent to HK$8.29 yesterday before earnings were announced. On the Shanghai exchange, its shares rise 16.5 per cent in the past year, rising 0.6 per cent yesterday to 9.30 yuan.